Tata Group to exit telecom sector amidst growing losses; 5000 jobs hang in balance: Report

BT Online   New Delhi     Last Updated: October 9, 2017  | 18:33 IST
Tata Group to exit telecom sector amidst growing losses; 5000 jobs hang in balance: Report

Tata Teleservices, the telecom arm of Tata Group, is planning to cease operations after mounting losses. Fate of around 5,000 employees presently engaged with the company hangs in the balance if the salt-to-software conglomerate decides to pull out of the telecom business. This will also be the first major unit under Tata Sons to shut shop in the group's 149-year history.

With things turning for the worse, reports state that Tata Teleservices is readying exit plans for its staff members. The company employs a staff of 5,101 as on March 31, 2017, according to its latest annual report. The employees are to be offered notice periods of six to three months, and severance packages for those who wish to leave earlier, said a report by The Economic Times.

A voluntary retirement scheme will be rolled out in a few months for senior members of staff above a certain age limit. Only a small percentage of employees will be absorbed in other companies of the Tata Group. Only those staffers who have a specific qualification which can be put to use in other group companies will be taken up for absorption, the report said.

"The Tata Group has always taken care of its people, but very few will get absorbed in other group companies. It is unfair to saddle other Tata companies with employees of TTSL," an anonymous senior official was quoted by the ET.

The 21-year old telecom company had reportedly asked its circle heads back in September earlier this year to leave by March 31, 2018, when the current financial year ends. Circle heads who leave now will receive the salary for the rest of the financial year, search firms looking into telecom industry have informed, which could be close to Rs one crore.

Tata Group, however, has clarified that it is looking into every option available before finally closing down. Closing down business is bound to hurt the interests of stakeholders who have invested in the company. Tata Group was in talks with other firms for selling its telecom arm, to avoid this eventuality, but its debt amounting to Rs 30,000 crore played spoilsport.

Representatives from Tata Teleservices have met officials of Department of Telecommunication, to apprise them of decision to close down the company and to discuss sale or surrender of the spectrum allocated to or purchased by them. The process in this direction could reportedly begin by next month. The 800MHz spectrum owned by the company could attract competitors looking to expand their 4G network.

Tata Teleservices commenced operations in 1996 with landline services. The company launched CDMA services in 2002 and later moved on the GSM services 2008. Upon this, it received Rs 14,000 crore investment from NTT Docomo. The Japanese telco later exited the joint venture in 2014 on account of poor financial returns.

Meanwhile, the Tata Group is planning to streamline its extensive portfolio and consolidate group companies to simplify operations. The conglomerate could merge companies based on clusters like realty, agriculture and others.

Leaving five major Tata Group companies alone - TCS, Tata Steel, Tata Motors, Tata Power and IHCL - the rest could well be clustered as communications and ITES companies, consumer and retail companies, realty and infrastructure companies, agriculture and chemicals companies, service-related companies and financial services companies, as so on.

Also Read:Tata Group to prune portfolio, bring consolidation: Tata Sons Chairman N Chandrasekaran

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